In-Home Smart Speakers: A War of the Big Three

Smart speakers represent a new interface in the customer relationship. Holiday shopping in 2017 established clear battle lines in the home AI market. Amazon, with its Alexa service, Google Home speakers, and Apple’s Siri-enabled services and delayed HomePod speaker are way out in front of the rest of the pack in terms of installed base. Indeed, one columnist says this year’s Consumer Electronics Show is the Microsoft Cortana assistant’s funeral.

Analyst firm Canalys projects 42.8 million or more smart speakers will be sold in 2018 in the U.S. and China.

Voice UX is usually portrayed as a silver bullet for customer engagement, and it may become so over time. For now, however, accuracy and contextual understanding of speakers’ words is lacking. Fixed command phrases that must be memorized and delivered in specific sequences are problematic for people.

Bots, being the shiniest of the new tech playthings, get plenty of praise, but the expectations for voice interaction are over-hyped right now. Until speech interaction approaches human conversational speed and efficiency, which requires more semantic understanding than bots currently provide, intimacy will be hard to achieve.  Voice UX may be good for instigating repeat orders, e.g., “Alexa, order another box of Tide,” are practical, but complex selling will have to wait for further evolution. It is likely that AI bots will support human connections, bringing humans onto a call with a user when the bot’s responses are insufficiently engaging, for many years to come.

Humans, we believe, are essential to trust relationships. Speakers can help make connections, but will not be able to handle simple objections for years to come. Think of the smart speaker like the new switchboard for consumers to connect with companies rather than as an unstaffed sales interface.

Where do the voice service leaders rank in units sold during 2017?

Google used heavy discounting during the holidays to sell 6.8 million Google Home speakers between October and Christmas. Consumer Intelligence Research Partners, a research firm, reported that Google had sold seven million Google Home units before the fourth quarter. Hence, Google Home sold approximately 13.8 million units through December 31st.

By contrast, Apple did not have its $349 HomePod speaker ready for the holidays, and we can count only Siri-enabled phones and Macs sold, for a total of 211.88 million iPhones and 19.25 million Mac computers, or 231.05 million Siri-capable devices in 2017. This is a considerable number, but currently has no speaker complement to these devices, nor the tens of millions of Apple TV devices its sold.

Apple’s ability to meld voice interfaces to a wide range of services through HomePod, iPhone, Apple TV, Macintosh and in-car systems is the company’s residual opportunity. The Siri strategy remains too fragmented, as it is missing an ambient listening post in most homes. The HomePod story and user experience is a critical test for Apple in 2018.

Amazon is the leader with real-world tools and services in consumer homes. By the end of Q3, 2017, 20.5 million Alexa devices had been sold, according to voicebot.ai. Jeff Bezos, Amazon CEO, founder, and richest person in the world said Amazon sold “tens of millions” of Alexa devices over the holidays. Assuming Bezos is using the phrase accurately, there are at least 45 million Alexa devices boasting the largest variety of “skills” of any platform.

Is Cortana out of the picture for good? Microsoft has continued its increasingly open approach to partnering, announcing it will integrate Cortana and Alexa for Windows users. While the PC market is slowly declining compared to mobile devices, it still accounts for more than 200 million units shipped annually. That’s a beachhead of a different kind; one Microsoft must leverage to compete in its cognitive services business. Cortana may not be the voice speaking from PCs, but Microsoft could become the master integrator of voice services.

Ultimately, smart speakers will extend the voice and P2P aspects of on-demand services in the home. People in local markets will deliver the personalization promised by intelligent speaker hype by tying into and using voice UX to connect with customers when appropriate.